Interesting analysis and data coming out from a study (see below). My initial thought though however is: why is this a surprise? For those that covered this space in the late nineties (Dot Com 1.0) we went through a very similar experience. There was a very high degree of irrational exuberance by companies wanting to launch online communities. Most failed. Now we’re back using terms like social media and social networks. One can make the case that the technology can enable a better user and group experience but the fundamentals of relationship and community-building are not advanced by better tooling. This is very hard work. I would recommend you sign up for the BeeLine Labs report (last citation link below).
Business Technology : Why Most Online Communities Fail
One of the hot investments for businesses these days is online communities that help customers feel connected to a brand. But most of these efforts produce fancy Web sites that few people ever visit. The problem: Businesses are focusing on the value an online community can provide to themselves, not the community.
Most corporate-sponsored online communities are virtual ghost towns
That’s according to Ed Moran, a Deloitte consultant who just completed a study of more than 100 businesses with online communities. Not surprisingly, these sites failed to gain traction with customers. Thirty-five percent of the online communities studied have less than 100 members; less than 25% have more than 1,000 members – despite the fact that close to 6% [Note: error in original story, 6% mot 60%] of these businesses have spent over $1 million on their community projects. “A disturbingly high number of these sites fail,” Moran tells us.
SitePoint Blogs » Study: Why Most Online Communities Fail
- Businesses are being enticed by fancy technology. Mesmerized by bells and whistles, many business are foolishly blowing their entire budgets on technology. Moran’s advice is to reach out to community members and let them do your R&D for you, rather than blowing it on fancy tech you may not really need. If the goal of a community associated with a brand is to get people to evangelize your products or services, put money and time into reaching out them rather than developing a fancy site.
- Lack of proper management. The Deloitte study found that 30% of online communities have just part-time employees in charge, and most have just a single PR person running the show. Advice: hire a social community manager with experience running and building an online community. Managed communities are a lot less likely to grow organically the way general mainstream social networks do, so you need someone who knows how to build one in charge. My former colleague Marshall Kirkpatrick wrote a great post earlier this week about the merits of online community managers.
- The wrong measurement metrics. Moran noticed that most businesses are measuring the success of their communities in the wrong way. Though their stated goals are usually to create viral, word-of-mouth marketing and increase brand loyalty, the metric they use to gauge success is unique visitors. If all you’re after is growing visits to the site, then you’re missing the point. You’re not trying to compete with mainstream social networks, so you don’t need to chase eyeballs. Rather you need to build interaction and create a level of comfort among your most loyal users so they will evangelize your products for you. The best way to measure this might be by looking at things like blog mentions and Twitter tweets.
Beeline Labs » The 2008 Tribalization of Business study
THE MAJOR TAKEAWAYS
#1: Communities are about Delivering Game-Changing Results
- Communities can increase revenue per customer dramatically, i.e., 50%
- Communities will increase product introduction success ratios
- Communities amplify everything you do- increasing effectiveness and decreasing costs
#2: The Rise of the CMO 2.0?
- Communities should be an important part of the CMO’s toolset (but for many large companies - there is an under-investment and scale problem)
- Companies should evolve the role of the CMO into Chief Community Officer (but that will require drastic changes in attitude and approach to marketing)
- If done properly, communities will transform the way marketing works (reduced costs, improved effectiveness, new opportunities)
#3: The Need for New Management Thinking
- Mismatch between community goals and associated investments
- Major gaps between Community Goals and what is being measured
- Communities have yet to combine with major talent initiatives
- Communities will transform most business processes
#3.5: The Worst Practices Enjoy Wide Adoption
- The “build it and they will come” fallacy
- The “let’s keep it small so it doesn’t move the needle” phenomenon
- The “not invented here” syndrome